Correlation Between H M and Moncler SpA

Can any of the company-specific risk be diversified away by investing in both H M and Moncler SpA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining H M and Moncler SpA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between H M Hennes and Moncler SpA, you can compare the effects of market volatilities on H M and Moncler SpA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in H M with a short position of Moncler SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of H M and Moncler SpA.

Diversification Opportunities for H M and Moncler SpA

0.81

Correlation Coefficient

H M  Moncler SpA

Very poor diversification

The 3 months correlation between HMRZF and Moncler is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding H M Hennes and Moncler SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moncler SpA and H M is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on H M Hennes are associated (or correlated) with Moncler SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moncler SpA has no effect on the direction of H M i.e., H M and Moncler SpA go up and down completely randomly.

Pair Corralation between H M and Moncler SpA

Assuming the 90 days horizon H M Hennes is expected to under-perform the Moncler SpA. But the pink sheet apears to be less risky and, when comparing its historical volatility, H M Hennes is 1.16 times less risky than Moncler SpA. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Moncler SpA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  5,600  in Moncler SpA on September 13, 2024 and sell it today you would lose (173.00) from holding Moncler SpA or give up 3.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

H M Hennes  vs.  Moncler SpA

H M Hennes

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H M Hennes has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, H M is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Moncler SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Moncler SpA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Moncler SpA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with H M and Moncler SpA

The main advantage of trading using opposite H M and Moncler SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H M position performs unexpectedly, Moncler SpA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Moncler SpA will offset losses from the drop in Moncler SpA's long position.

The idea behind H M Hennes and Moncler SpA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.